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November 24th 2004

Dear All

After the recent Brigade Committee Meeting at Ashford I was tasked to set up a group to look at the Fireman’s Pension Scheme (FPS) amendments, and the ramifications to members on this scheme.

I enlisted the help of Steve Finlay (Strood), Mat Hodge (Ashford) and John Coleman (Emergency Centre). We arranged a meeting with personnel, and a further meeting with Clare Sylvester (KCC Pensions) on the 1st December 2004 at Brenchley House Maidstone.
We met with Andrew Bayne at SHQ today to start the dialogue with our employers, and it was agreed that it is managements responsibility to disseminate the information to members, and produce a layman’s version so as all could see how it will progress.

I have seen a copy of the ODPM’s Q&A’s with reference some of the questions we all must be asking, and I have copied below:

Q: I joined the Service in 1985 which means that in April 2013 I will have 28
years’ service but I will not be 50 until October 2014; will I have to work
until I am 55 in October 2019 before I can draw my pension and retire?

A: You will be able to retire any time after you attain age 50 in 2014 and before age 55
because you will have more than 25 years’ service. However you will only be able to
draw your pension in respect of service for the 21 years up to April 2006, the balance
of your pension will come into payment when you are 55.
If you were to die before age 55, your widow(er) would be entitled to benefits based
on the full pension entitlement.
In considering responses to the consultation after 14 January 2005, Ministers will
wish to consider whether a person should be able to take the second part of the
pension at the same time as the first part with an actuarial reduction. The reduction in
the amount of the pension would reflect the fact that it is being paid early, but it
would be cost neutral to the pension scheme.

Q: If I retire before I am 55 and my pension is paid in two parts: for service
up to 2006 and for service after 2006, when will I be able to take my
commuted lump sum? If it is not paid until I am 55, I will be
disadvantaged as its value decreases after age 52.

A: The commuted lump sum will be paid in two instalments as each part of the pension
comes into payment.
It should be noted that under the terms of the Firefighters’ Pension Scheme (FPS),
commutation reflects not only the value of the pension at the time the pension comes
into payment, but the factors reflect age and gender. Furthermore, the factors can be
varied at any time, for example to reflect changes in life expectancy, and there is no
guarantee that the current factors will not be varied before 2013.

A: Why cannot I take the two parts of my pension when the first part is due
to come into payment?

A: It is proposed that the minimum pension age for members of the FPS should be
increased in April 2006 from 50 to 55. Ministers have agreed that there should be a
transitional period between 2006 and April 2013 during which those who will be aged
50 or older and retire with more than 25 years’ service will be exempt from the
change. One of the reasons for making the change is to reduce the cost of pensions
and this will enable the contribution rate of 11% currently paid by firefighters to be
maintained rather than increased.
In considering responses to the consultation after 14 January 2005, Ministers will
wish to consider whether a person should be able to take the second part of the
pension at the same time as the first part with an actuarial reduction. The reduction in
the amount of the pension would reflect the fact that it is being paid early, but it
would be cost neutral to the pension scheme.

Q: Why are these changes necessary since I joined the service with the
expectation that I would be able to retire with a full pension at age 50?

A: The Government is changing the regime for all public service pension schemes. There
are a number of reasons for this, including demographic and other changes which are
resulting in an increase in the numbers of pensioners in proportion to active workers,
with the consequent need for the working lives of people to be extended.
The proposals to amend the current FPS will help the Fire and Rescue Service ensure
that the existing scheme can still be financed during the transition to the greater
changes included in the proposals for a new pension scheme.

Q: When I joined the Service, I transferred into the FPS the value of my
pension from my previous employment because I thought it would enable
me to retire with a full pension soon after my 50th birthday; it will be
unfair if I now have to work until I am 55. I would have had better value
from my previous pension scheme if I had left it untouched and it had
been paid as deferred pension at age 60 or 65.

A: Provided that you transferred the value of your previous pension into the FPS before
April 2006 it will form part of your service at that date. This means that when the first
part of your pension comes into payment you will have the benefit of the increased
value of your pension. You will still be able to retire after you have accrued full
pension benefits provided you are aged 50 years or over. The second part of your
pension will be paid at age 55.

Q: I believe that as a result of the changes I will have to work for more than
30 years before I can draw my full pension at age 55; would I be better
advised to opt out of the FPS and to rejoin at a later stage and so ensure
that I only pay contributions for 30 years?

A: The answers to the previous questions should reassure you but if you still think that it
might benefit you to opt out this would be a matter for you to decide on the basis of
independent advice. You should be aware that if you were to opt out now you would
need to rejoin before April 2006 when the FPS will be closed to new members.
However under Rule G3 of the FPS a person who has elected not to pay employee
contributions and thereby leave the scheme cannot rejoin the scheme after their 45th
birthday, and also to rejoin the fire and rescue authority has the discretion to seek
confirmation of the applicant's good health. If you are not allowed to rejoin the FPS,
any pension to which you may be entitled would be paid as a deferred pension at age
60.

Q: Do I have to retire and take my pension after April 2013 when I have
completed 30 years’ service or may I continue until I am aged 55 or
more? Alternatively, as I will not have completed 30 years’ service at age
55 may I continue in service and choose when I retire?

A: You will not have to retire as we are intending to abolish the compulsory retirement
age, which is currently age 55 for most firefighters, but it is likely that you will have
to satisfy the fire and rescue authority that you are fit to continue in your role.
However we have no current plans to increase the pension benefits to reflect
additional years or alternatively to reduce the contribution rate once a person is
entitled to the maximum years of pensionable service that can be taken into account
when calculating benefits. Ministers may wish to consider these possibilities when
taking their final decisions on the matters outlined in “Proposals for amendments to
the Firefighters’ Pension Scheme” but will need to have regard to the cost impact on
the scheme: it was made clear in the consultation that if the proposed changes were
made the savings delivered would enable the current employee pension contribution
rate of 11% to be held for the time being. In addition it should be noted that payment
of contributions ensures you’re your pension benefits reflect earnings growth and the
potential to get higher death in service lump sums.

Q: I shall be 50 with more than 25 years’ service before April 2013, but will
not have completed 30 years for full pension benefits until after that date,
will I have to wait until I am 55 before I can take my full pension?

A: Although the consultation document implies that you will have to wait until you are
55 to draw your full pension, it is not the intention that scheme members who are
aged 50 with 25 or more years’ service in April 2013 should be adversely affected if
they choose to continue working. Whenever you retire after April 2013 you will be
able to take all the pension benefits you have accrued and will not have to wait until
you are 55 for any part of them.

Q:. I shall be aged 50 with 30 years service before April 2013 but may not
wish to retire, will I have to go on working until I am 55 before I can take
my pension?

A: No. As you will be aged 50 with more than 25 years’ service you will be able to take
your full pension when you retire, even if that is before you are 55

Q: The consultation documents refer to the fact that separate proposals for
injury benefits are being formulated, is there any indication as to what
these will be?

A: The existing arrangements have to change because Inland Revenue rules do not allow
death and injury benefits which are not part of the pension scheme to be included in
the scheme rules.
Ministers have made clear that any new scheme should give statutory backing to the
compensation arrangements which were previously included in paragraph IX.13 of
the Conditions of Service (the Grey Book).
Proposals which are expected to be available for consultation early in the New Year,
will also include injury benefit arrangements along the lines of those currently in the
FPS which reflect loss of earnings capacity linked to length of service, but with some
changes to ensure that compensation is more proportionate between the different
categories than at present. Any improvements in the benefits, for example extending
the spouses’ injury benefits to unmarried partners, would need to be offset by other
savings and therefore to be cost neutral.

If anyone has any questions please do not hesitate to contact either of the FPS Reps.

Please copy the sample letter to your MP and E-mail questions to: Martin Hill
E-mail: martin.hill@odpm.gsi.gov.uk
Telephone: 020 7944 8641, try to copy Harry Sawyer or Myself into any E-mails.

Kind Regards

Ian Young

Brigade Chair